Egypt Inflation Rate Declines for Fourth Consecutive Month

Egypt’s urban inflation rate has fallen again, for the fourth consecutive month in June, decreasing to 27.5% from 28.1% in May, according to data released by the country’s statistics agency on Wednesday.

The downward trend started in September 2023, when inflation peaked at 38% following the government’s adoption of an inflation targeting model and a flexible exchange rate policy.

Core inflation, which excludes volatile items such as fuel and certain food products, also declined to 26.6% year-on-year from 27.1% in May, as reported by the central bank on the same day.

Economists indicate that efforts to boost local food production in Egypt have been only partially effective, leaving the country’s economy vulnerable to external factors.

In June, food and beverage prices increased by 30.8% year-on-year and 3% month-on-month, primarily due to a 300% surge in subsidized bread prices starting on 1 June.

However, the increase in bread prices had a limited impact on the overall index, as bread comprises only about 1% of the food basket. This rise was offset by lower prices for other food items and a favourable base effect.

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